Fake Driving License: Insurance Liability
Has the insurer liability to compensate the insurance holder or those who have injury, if it was found after the motor vehicle accident, that the driver of the vehicle had only a fake driving license?

What motor vehicle act says?

According Motor Vehicle Act, 1988

1. use of vehicle
   
   1. for a reward for which the vehicle has not been permitted on the date of the insurance contract, or
   2. for organised speed tests and races, or
   3. for the purpose which is not permissible by permit, or
   4. motorcycle without a side-car, and
2. condition excluding driving the vehicle by
   
   1. not duly licensed person, or
   2. person who has been disqualified for holding or obtaining a driving license are leading to the absolution of insurer from the liability towards the insurance holder.[1]

Significant Cases:
United India Insurance Company Limited vs. Lehru and others [2]
The mere absence of genuine license is not an absolute ground for avoiding liability of insurance company to compensate. Wilful breach of any of above mentioned conditions should be established to avoid liability of insurer. When hiring a driver, the owner should check driving license of driver and should test driving skills. The employer is not liable for fake license of employee unless the employer was told that the employee bear fake driving license.

Whether otherwise, for example, a motor vehicle was theft. And while running the vehicle by thief , it caused an accident which lead to death of third party. During the trial it was found that the thief had a fake driving license. Can the insurer withdraw the insurance to third party on the ground that the person driving the vehicle was licensed by false and can the owner of vehicle make liable?

And if the driver i.e., thief was made liable then that decree may only be a paper decree. That is why Legislature had made insurance, at least third party insurance compulsory. Thus the insurance company must establish that the breach was on the part of insurance holder, for the absolution of liability.

National Insurance Company Limited vs. Swaran Singh and others [3]
If the owner did not take necessary care and caution to verify license then the liability remain open ended for facts and circumstances. But the burden of proof abide on insurer to prove lack of care and caution of insured to find genuinely of driver's license.

National Insurance Company Limited vs. Laxmi Narain Dhut [4]
Observation of the Court in this case was that, the insurer has to prove that the insured was guilty of negligence as failed to reasonable care on policy regarding duly licensed driver who is not disqualified.

Pepsu Road Transport Corporation vs. National Insurance Company [5]
The process of verification of driver by owner of insured vehicle is limited. The owner has to check driving license. If it is genuine on face, then, (s)he has to satisfy to the competency of driver through test drive. It can not be expected beyond these. It is not necessary to verify the license with the licensing authority. But if the insurer required at the time of insuring or during the period of insurance to duly verify the license , the the insurer has to undergo the process.

Nirmala Kothari vs. United India Insurance Company Ltd. [6]
It is unreasonable to place high onus on insurance holder to make enquiries with RTOs to ascertain veracity of the employee's driving license.

Ram Chandra Singh vs. Rajaram & others [7]
If the owner hire the driver by satisfying his/her competency to drive, with the awareness of the fact that the driver pursue a fake driving license , then the owner would be liable to pay compensation. But mere fact and concession would not absolve the insurer. The insurer has to dispute that the driving license was found to be fake.

Skandia Insurance Co. Ltd. vs. Kokilaben Chandravadan [8]
In this case the the owner i.e., insured has never permitted cleaner or any person other than licensed driver to drive the vehicle. But at the time of accident the control of truck was on cleaner. The driver was guilty of negligence as he leave the vehicle with running engine and cleaner. So even if the breach of condition is from owner, owner can not be liable for the negligence of driver.

Sohan Lal Passi vs. P Sesh Reddy [9]
Skandia case was questioned by Insurance company. In this case , at the time of accident causing injury to person on scooter , the bus was driven by cleaner under the course of driver who are employee of insurance holder. The owner has not taken the stand that the irresponsible act of driver was not in his knowledge. As per facts and circumstances in the present case, the owner is deemed to be liable to pay the compensation applying the principle of vicarious liability.

Because master - servant relation was existing between owner and driver at the time of accident. And the accident took place when the authorised act was being performed in a mode which may not be proper but directly connected with the course of employment. So the insurance company was held jointly and severally liable to pay the compensation to the third party. Whether the owner had pleaded that , the driver instructed the cleaner to drive the vehicle against the strict warning of owner not to do so, then perhaps the judgement might have be different.

Conclusion
Defences of insurance company such as fake or invalid license or absence of license or disqualification of driver for driving at that specific time are not sufficient to get rid of insurance liability. The insurer has to prove that the insured was guilty of negligence and failed to exercise reasonable care and caution regarding the use of insured vehicle at the relevant time, to get rid of liability towards insured as well as third party. The negligence of insured has to be found according to the facts and circumstances.

End-Notes:

1. Section 142(a) of Motor Vehicle Act, 1988
2. United India Insurance Company Limited vs. Lehru and others (2003) 3 SCC 338
3. United India Insurance Company Limited vs. Lehru and others (2003) 3 SCC 338
4. National Insurance Company Limited vs. Laxmi Narain Dhut 2007 (3) SCC 700
5. Pepsu Road Transport Corporation vs. National Insurance Company (2013) 10 SCC 217
6. Nirmala Kothari vs. United India Insurance Company Ltd. 2020 (4) SCC 49
7. Ram Chandra Singh vs. Rajaram & others, A.I.R. 2018 SC 3789
8. Skandia Insurance Co. Ltd. Vs. Kokilaben Chandravadan 1987 ACJ 411 SC
9. Sohan Lal Passi vs. P Sesh Reddy 1996 (5) SCC 21